End-of-year hiring may signal stronger economy

In a surprising turnaround from last year's job malaise caused by rising oil prices and Hurricane Katrina, Sonoma County employers are hiring at a speed not seen since the tech boom electrified the local economy.

Local companies more than doubled their pace of hiring in late fall and winter, sending the unemployment rate down to 4.3 percent in January from 5 percent a year earlier, according to a state labor report released Friday.

"The middle of last year was really weak because of the uncertainty about energy prices and (then) the hurricane hit. But once we got beyond the uncertainty, firms were hiring," said Steven Cochrane, managing director at Economy.com, a Pennsylvania research firm that tracks the county's economy.

The figures suggest the economy is off to a fairly strong start this year despite weakness in housing and retail sales, analysts said. It echoes several positive economic reports in recent days, including signs of a rebound in business investment and a slight rise in average wages.

The dramatic surge in jobs occurred in October through January, when Sonoma County had about 3,000 more jobs than it did a year earlier, according to the state Employment Development Department's January job report.

Before the spike, the county was on track to add about 1,000 jobs over the previous year. Most analysts had predicted that moderate hiring pace would continue.

"A lot of companies are quietly expanding," said Ben Stone, coordinator of the county's Economic Development Board. "Everywhere I go, I pick up more confidence."

In January, the county had 3,600 more payroll jobs than a year earlier. Most of the growth was in construction, tourism-related businesses - mainly restaurants and hotels - and professional and business services. Food manufacturing and wineries added some positions, but hiring in health care was modest and high-tech manufacturing lost jobs.

The jump in winter hiring also showed up at the national level. U.S. unemployment in January was 5.1 percent, its lowest mark in more than four years. In California, the jobless rate was 5.4 percent, down from 6.2 percent a year earlier.

The pickup in hiring in Sonoma County made 2005 the strongest economic year in four years. If sustained throughout 2006, it could bring the county close to 2001 hiring levels, at the peak of the telecommunications boom.

The county lost 7,600 jobs during a two-year slump that ended in 2003. It has regained 3,000 jobs, based on annual averages. At the heightened pace in recent months, it could add another 3,000 or more this year.

The higher job levels can be sustained if they hold through the seasonal rise in gasoline prices expected this summer and if they reflect businesses' expectations of increased demand, said Robert Eyler, chairman of the Economics Department at Sonoma State University.

"If this job growth is due to new demand forecasts in these industries, then we should not see a quick reversal," Eyler said.

While the county economy is churning out jobs at an increasingly faster pace, employers still shed 3,500 jobs from December to January. The one-month drop was part of a predictable seasonal trend, with the loss of construction, tourism-related and holiday retail jobs.

The unemployment rate rose to 4.3 percent in January, up from 3.8 percent in December.

In January, companies in Sonoma County had 190,000 wage and salary employees, up from 186,400 a year earlier.

A separate survey of county households found that 243,400 county residents were working and 11,100 were unemployed and looking for work.

The two reports differ because the survey of households includes the self-employed, residents who may work outside the county and people who work for cash.

The count of unemployed does not include people who are no longer looking for a job but wish they had one or are working fewer hours than they would like.

Sonoma County ranked eighth out of California's 58 counties in its January unemployment rate. The lowest rate was 3.6 percent in Orange County. Marin County was second at 3.8 percent.

In Mendocino County, the January unemployment rate was 6.2 percent, down from 7.3 percent a year earlier. In Lake County, it was 8.3 percent, down from 9.7 percent.

In Friday's report, labor analysts revised downward their earlier estimates of Sonoma County payroll jobs in 2005. As part of an annual update of their job data, to make it more accurate, they found 1,200 fewer jobs in March 2005 than had been thought. The update was used to adjust monthly job counts from April 2004 forward.

The news of the job loss was overshadowed, however, by the strong employment in October through January.